Investing in SUCs: Challenges and opportunities
State universities and colleges (SUCs) are critical pillars of higher education, human capital development, and technological innovation in the Philippines. As SUCs expand access to higher education, they act as equalizers that can level the playing field for the underprivileged. These institutions are essential in addressing educational disparities, promoting inclusive growth, and advancing research that contributes to national development. They serve as hubs for talent cultivation and skills training, supporting the development of a knowledge-based economy.
Today, the Philippines has 113 SUCs operating nationwide. SUCs face common challenges such as financial constraints, regulatory barriers, and sub-optimal use of funds, which undermine long-term sustainability. A persistent issue is the lack of funding for capital outlays, leading to aging buildings, outdated and inadequate facilities, and the discontinuation or non-implementation of development plans despite a growing student population. Additionally, SUCs struggle to recruit specialized personnel like psychometricians and guidance counselors due to uncompetitive salaries, forcing them to rely on temporary staff. Retention of academic staff is also problematic when there is insufficient support for human resource development.
SUCs mainly depend on government subsidies for funding. They also generate income from tuition, auxiliary services, and income-generating projects (IGPs). Under the Universal Access to Quality Tertiary Education Act, the government now covers the tuition fees of undergraduate students. While research grants are sought, procedural barriers often hinder SUCs, especially lesser-known universities, from securing funding. SUCs face challenges like uneven budget distribution, limited financial independence, and multiple layers of bureaucracy that slow down effective use of funds. Many struggle to maximize revenue from IGPs and turn research outputs into profitable intellectual properties (IPs) because they lack entrepreneurial skills and necessary facilities.
To address these issues, it is essential to pursue strategic reforms in SUCs’ financing. International experience provides insights into how Philippine SUCs can become more financially sustainable. For example, Singapore funds its universities through block grants with a three-year budget cycle and strong endowment funds.
Singapore’s National Research Foundation Central Gap Fund actively promotes the commercialization of research outputs. Meanwhile, Thailand adopts a decentralized approach that grants autonomy to universities via block grants, allowing for more flexible fiscal management. This strategy has resulted in higher research budgets and increased operational efficiency.
Locally, the establishment of knowledge, innovation, science, and technology parks in SUCs, through the support of the Department of Science and Technology and the Philippine Economic Zone Authority, can further unlock the optimal utilization of land grants and foster industry partnerships. The UP-Ayala Land TechnoHub serves as a pioneer in this type of university-industry collaboration. This partnership fosters technology commercialization, business incubation, and job creation. Although there are debates surrounding this approach, such as the prioritization of IT services versus a more research-intensive focus, similar partnerships can facilitate a more optimal utilization of SUCs’ assets.
Other good practices include continuous investment in faculty and staff capacity building, especially for research, and emphasizing digitization for increased administrative efficiency.
The government should continue pursuing the creation of more fiscal space, allowing for more investments in higher education. Furthermore, strengthening university-industry partnerships and facilitating the commercialization of IPs and innovations can substantially improve SUCs’ funding and support the country’s development agenda.
Down the line, performance-based funding linked to clear and transparent key performance indicators can further enhance efficiency. A more ambitious reform for the Philippines is to grant greater financial independence to SUCs through block grants and multi-year budgets for internally generated income, giving them flexibility in resource allocation.
An effective tuition fee structure can support these block grants, which should be based on the standard cost of education delivery, a quality premium, and the capacity limits of SUCs.
To effectively serve as catalysts of social and economic progress, the financial sustainability of SUCs must be achieved through strategic reforms that free them from financial constraints imposed by conservative and rigid structures.
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Herisadel Flores is the author of a study on SUC financing, in support of the Second Congressional Commission on Education (EdCom II), and is an assistant professor at UP-NCPAG. Mai Jewels Sagum recently graduated from the same institution.
